The Real Deal Miami

St. Petersburg mall project illustrates how Sears is downsizing

The retailer works closely with Seritage Growth Properties to maximize the value of its real estate

July 30, 2017 10:00AM

The Tyrone Square shopping mall in St. Petersburg

The redevelopment of a former Sears department store in St. Petersburg illustrates how billionaire Eddie Lampert is dealing with the decline of the Chicago-based retailer.

Lampert is chairman and chief executive officer of Sears Holding Corp., the corporate parent of Sears and Kmart. He also serves as chairman of Seritage Growth Properties, which owns about 200 Sears and Kmart stores and leases them to Sears Holding under a master lease agreement.

Under that agreement, Seritage can “recapture” certain store space from Sears Holding and redevelop it or replace Sears and Kmart with new tenants.

In St. Petersburg, Seritage plans to demolish the 188,515-square-foot store Sears formerly occupied at the Tyrone Square Mall and to develop 151,952 square feet of new retail space for a Dick’s Sporting Goods location, a Petsmart outlet and the first Lucky’s Market grocery store in the Tampa Bay area.

Jeff Green, a Phoenix-based retail analyst, told the Tampa Bay Times that Lampert has set up unique arrangement between Sears Holding and Seritage, a real estate investment trust formed in 2015 and listed on the New York Stock Exchange under ticker symbol SRG.

Green told the Times that their real estate represents most of the value of Sears department stores, and the formation of Seritage allows Sears Holding to monetize the value of some Sears stores by putting them in a separate public company.

Indeed, the $2.4 billion market value of Seritage is about three times greater than the $800 million market value of Sears Holding.

Sears Holding is closing part of some Sears department stores, and Seritage is leasing the vacated space to other retailers. In Clearwater, for example, Seritage converted half of a Sears store at the Westfield Countryside Mall to a Whole Foods Market. [Tampa Bay Times] – Mike Seemuth